MANAGEABLE RETIREE COSTS: The city has been making 100% of required
contributions to its pension plans and prudently increased annual
contributions for its other post-employment benefits (OPEB) obligation.
These liabilities are currently at manageable levels.

CREDIT PROFILE:

Meriden is located in northeast New Haven County, midway between New
Haven and Hartford with a 2011 population of 60,770. The city benefits
from a somewhat diverse tax base and stable population.

MIXED SOCIOECONOMIC INDICATIORS

The city is home to Midstate Medical Center, a full-service hospital,
the Meriden campus of Middlesex Community College, a major mall, and a
number of manufacturing firms with diversified product lines. The top 10
taxpayers represent a moderate 8% of net taxable grand list. The city
continues to focus on attracting new businesses and reclaiming and
rehabilitating existing land and properties for future development.

The city's tax base was revalued on Oct. 1, 2011, as part of the
statutorily required five-year revaluation (effective for the fiscal
2013 budget). The city's fiscal 2013 market value is currently $4.6
billion and has decreased 10.7% from last fiscal year. The city
prudently increased property tax rates by 4 mills to maintain revenue
neutrality. Wealth levels exceed national levels but are below the
strong state of Connecticut levels. The city's October 2012 unemployment
rate is 10.3%, slightly elevated from 10% a year prior, and higher than
both the state (8.6%) and the nation's (7.5%) rates.

SOUND FINANCIAL MANAGEMENT

The city's finances are well managed. The city's fiscal 2011
unrestricted general fund balance (the sum of committed, assigned, and
unassigned as per GASB 54) totaled $17.3 million or a sound 9.6% of
spending. Results were marginally above the city's recently adopted
formal policy calling for the average of one month's budgeted spending
from the prior fiscal year (8.3% for fiscal 2011).

Fiscal 2012 posted a small deficit (0.5% of spending) after three-years
of operating surpluses. This was due primarily to the city's increased
OPEB funding to 50.7% of the annually required contribution from 29.6%
in fiscal 2011. Fitch views the increased contribution as a credit
positive in conjunction with the city's stated commitment to adhere to
its fund balance policy.

Annual property tax increases have supported revenue growth, offsetting
minor shortfalls in non-tax revenues and state aid. Expenditure
performance has matched revenues, declining 2.2% on average between
fiscal 2008 and fiscal 2012, reflecting the city's flexibility in
adjusting spending. The 7.3% increase in fiscal 2012 spending was
one-time in nature, driven by employee and education costs related to
special revenue funds (American Recovery and Reinvestment Act). The
city's fiscal 2012 unrestricted general fund balance totaled $16.6
million, equal to a sound 8.6% of spending, and in compliance with the
city's fund balance policy.

The city's fiscal 2013 general fund budget of $183.6 million is up by a
slight 1.4% from fiscal 2012. The budget includes a 4% increase in
property tax revenues (equal to approximately $4 million) to support
increases in public safety, highway improvements, and insurance costs.
The budget includes a $1.2 million appropriation of fund balance to once
again support increased contributions to its OPEB trust. Beginning in
fiscal 2014 management has said that OPEB contributions will become
structured into the budget which Fitch views as a credit positive.

DEBT LEVELS UP BUT EXPECTED TO REMAIN LOW

Debt levels remain low after the current issuance with debt per capita
at $1,426 and debt to market value at 1.9%. GO debt amortizes at an
above average rate with 60.8% of principal amortized in 10 years.
Including the new issue, debt service as a percentage of general fund
expenditures will approximate 8.4% of the fiscal year 2013 budget
compared to 6.2% in fiscal 2012, and is above the enacted goal of 5% of
spending. While Fitch views non-compliance with policies as a credit
negative, the debt service burden remains affordable and the city
continues to adhere overall to its conservative debt policies. Fitch
does not expect debt levels to rise following the current issue as the
remaining $322 million five-year capital plan is largely funded through
grants and user fees.

MANAGEABLE RETIREE COSTS

The city administers three pension plans for its general, fire, and
police employees. In accordance with its policy, it has made 100% of its
annual required contributions (ARC) for the last five years for each of
these plans. Contributions in fiscal 2012 for all three plans totaled
$8.5 million (4.4% of general fund spending).

As of July 1, 2010, the general employees' plan was 105% funded; the
police plan was 62.9% funded; and, the fire plan was 68.4% funded. Using
Fitch's more conservative 7% discount rate assumption, the plans would
be funded 94.6%, 56.5% and 61.6%, respectively. The combined unfunded
liability for the police and fire plans totaled $60.1 million. The city
has established a defined contribution plan for non-safety employees
hired as of July 1, 2011, which is expected to reduce future pension
obligations.

The city's fiscal 2012 OPEB contribution was $5.6 million (51% of its
ARC), equal to manageable 3% of spending. The unfunded OPEB liability
was $99.2 million as of July 1, 2010. Management is projecting a decline
in the future OPEB ARCs due to agreed increases in employees'
contributions toward future benefits. The city will not be providing
OPEB benefits for new employees hired after July 2009.

Additional information is available at 'www.fitchratings.com'.
The ratings above were solicited by, or on behalf of, the issuer, and
therefore, Fitch has been compensated for the provision of the ratings.

In addition to the sources of information identified in Fitch's
Tax-Supported Rating Criteria, this action was additionally informed by
information from Creditscope, University Financial Associates,
S&P/Case-Shiller Home Price Index, IHS Global Insight, and the National
Association of Realtors.

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